Mississippi is phasing out its individual income tax. For 2026, residents pay a flat 4% on taxable income above $10,000, and legislation signed by Governor Tate Reeves on March 27, 2025 locks in yearly cuts that bring the rate to 3% by 2030. A revenue trigger built into the same law can keep pushing the rate down toward zero in the years after that.1Office of the Governor of Mississippi. Gov. Reeves Signs Historic Legislation Eliminating Mississippi’s Individual Income Tax
What You Pay in 2026
The 2026 rate is 4% on all taxable income over $10,000. The first $10,000 of taxable income is not taxed at all.2Justia Law. Mississippi Code Title 27 Chapter 7 Section 27-7-5 – Imposition of the Tax
“Taxable income” is not the same as your paycheck. It’s what remains after you subtract your standard deduction and personal exemptions from gross income, so the actual point where the 4% rate starts biting is higher than $10,000 for almost everyone.
Compared with the 5% top rate that applied as recently as 2023, the change is real money. A filer with $60,000 of income above the $10,000 threshold saves $600 in 2026 versus the old rate on the same income, and the savings scale up from there.
The Scheduled Rate Cuts Through 2030
House Bill 1 sets the following rates on taxable income above $10,000:3Mississippi Legislature. HB 1 As Sent to Governor – 2025 Regular Session
- 2026: 4.0%
- 2027: 3.75%
- 2028: 3.5%
- 2029: 3.25%
- 2030 and after: 3.0%
These cuts happen automatically on January 1 of each year. They do not require a fresh legislative vote, and there is no income-based bracket structure to navigate. Everyone pays the same flat rate on income above the $10,000 threshold, and everyone gets the same annual drop.
How the Rate Reaches Zero After 2030
Getting from 3% to zero is conditional. Starting in 2031, HB 1 allows additional automatic reductions, but only if two things are true at once. The Working Cash-Stabilization Reserve Fund (the state’s rainy-day fund) has to be fully funded, and the state’s adjusted general fund revenue for the prior fiscal year has to exceed the next year’s appropriations by enough to cover a portion of the cost of cutting the rate further.3Mississippi Legislature. HB 1 As Sent to Governor – 2025 Regular Session
When both conditions are met, the size of the next cut depends on how large the surplus is compared to the cost of a full 1% rate reduction:
- Surplus of 0.85% to just under 1% of that cost: rate falls by 0.2 percentage points
- Surplus of 1% to just under 1.15%: rate falls by 0.25 percentage points
- Surplus of 1.15% or more: rate falls by 0.3 percentage points
At the maximum pace of 0.3 points per year, the rate could hit zero roughly ten years after 2030. A weaker economy or an underfunded reserve could slow the reductions or pause them entirely. The phase-out is scheduled, but the final step to zero is not guaranteed on any fixed date.
Deductions and Exemptions That Come Off First
Before the 4% rate touches your income, two layers reduce what counts as taxable.
Standard Deduction
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Personal Exemption
- Single filers: $6,000
- Married filing jointly: $12,000 (couples can split this between spouses however they choose)
- Head of family: $8,000, provided you have at least one qualifying dependent4Mississippi Department of Revenue. General Information
An additional $1,500 exemption is available for each dependent, for each spouse age 65 or older, and for each spouse who is blind. If you file as head of family, your first dependent is already built into the $8,000 exemption and can’t be counted again.
Add the standard deduction and the personal exemption together and you have the minimum gross income that triggers a filing requirement: $8,300 for single filers and $16,600 for married filing jointly, plus $1,500 per dependent.4Mississippi Department of Revenue. General Information
Then the $10,000 zero-rate bracket applies on top. A single filer earning $18,300 in gross income has $10,000 in taxable income after the combined exclusion, and that $10,000 sits entirely inside the zero-rate bracket. No tax is owed. The 4% rate only starts once taxable income crosses $10,000.
Retirees See Less Change
Most retirement income in Mississippi is already exempt, so the phase-out changes less for retirees than for working-age residents. Social Security benefits, Railroad Retirement payments, veterans’ benefits, and workers’ compensation are fully exempt from Mississippi income tax. Pensions and annuities are generally exempt once you’ve met your plan’s requirements for a qualifying distribution. Early distributions that don’t meet those requirements can still be taxed.5Mississippi Department of Revenue. Individual Income Tax Frequently Asked Questions
What Isn’t Going Away
The phase-out covers the individual income tax only. Two things stay put.
Corporate income tax is unchanged. Mississippi still taxes corporate income at 4% on taxable income between $5,000 and $10,000 and 5% above $10,000, and no enacted legislation phases that out. Owners of pass-through entities like S-corporations and LLCs report business income on their individual return, so that income does benefit from the falling individual rate, but Mississippi’s pass-through entity tax election has some mechanics worth reviewing with a tax professional to avoid double-counting credits.
Sales tax is doing more of the work. Mississippi’s general sales tax rate stays at 7%, among the highest in the country, and sales and excise taxes are expected to cover a growing share of the state budget as income tax revenue falls.6Mississippi Department of Revenue. Sales Tax Rates Working in the opposite direction, the sales tax on groceries dropped from 7% to 5% effective July 1, 2025.
Non-Residents Still File
Living outside Mississippi doesn’t end the filing obligation. If you earned income in the state or had Mississippi income tax withheld from your wages, you have to file a Mississippi return as a non-resident or part-year resident.4Mississippi Department of Revenue. General Information The same rate schedule and exemptions apply to Mississippi-sourced income, so non-residents see the same annual reductions as residents.
Falling rates also don’t remove the duty to file if your gross income exceeds the thresholds above. A smaller tax bill is still a tax bill, and the filing requirement runs on gross income, not on how much you ultimately owe.